Estate taxes are assessed on certain estates by both the federal government and by the state of New York. These taxes can be substantial when you are supposed to pay them based on the value of your estate. It is imperative that you understand when and how estates are taxed and that you explore the options which may be available to you for reducing estate taxes after your death or even eliminating estate taxes altogether. 
Your heirs deserve to inherit the property you worked for without a substantial portion of their inheritance being lost due to high state and federal estate taxes.
Mark S. Eghrari & Associates PLLC can provide invaluable assistance to individuals who are making a plan for estate taxes. Your marital status can also impact whether you will be taxed or not, and how much you will be taxed, so it is important to get personalized advice specific to your situation.
Give us a call today to learn when and how married couples are hit with estate tax and to find out how our Suffolk County estate planning lawyers can help you to reduce the amount of tax which may have to be paid after your death.
When are Estate Taxes Assessed on Married Couples?
Estate taxes are assessed when a person dies only in situations where the value of the deceased person’s estate exceeds a certain value. Under federal law, the IRS will assess estate taxes only if the value of estate assets exceeds $5.45 million as of 2015. New York has lower limits for when estates are taxed.
For a death which occurred after April 1, 2015 and before March 31, 2016, estates would be taxed if they exceeded $3.125 million. For deaths which occur between April 1, 2016 and March 31, 2017, the excludable amount before an estate is taxed is $4,187,500. For deaths between April 1, 2017 and December 31, 2018, the excludable amount will be raised to $5.25 million.
While you can face a big tax bill once your assets have reached a certain level, married couples may have a better situation than people who are not legally wed. This is because it is generally permissible for one spouse to transfer assets to the surviving spouse without taxes being incurred, regardless of the worth of those assets. This means if a husband leaves his property to his wife, or vice versa, there won’t be estate tax triggered when the first spouse dies and the money transfers to the surviving widow or widower.
Married couples also benefit in another very important way. According to the Internal Revenue Service: “Beginning January 1, 2011, estates of decedents survived by a spouse may elect to pass any of the decedent’s unused exemption to the surviving spouse. This election is made on a timely filed estate tax return for the decedent with a surviving spouse. Note that simplified valuation provisions apply for those estates without a filing requirement absent the portability election.”
Essentially, this means if a husband or a wife passes away and does not use some or all of his $5.45 million tax break, this passes on to the surviving widow or widower. If the husband left all of his assets to the wife, for example, he would have used none of his $5.45 million exclusion. The wife would now have her own excludable $5.45 million as well as her husband’s, so she could pass an estate of $10.9 million without the value of the assets being subject to estate taxes.
While it may seem like this is a substantial amount of money and most married couples thus won’t be affected, it is important to remember there are many situations where assets like a family farm or business will end up being counted as part of an estate. The value of land and of business assets could push an estate over the excludable limit and taxes could be assessed, even if there’s really very little cash left to heirs and only illiquid assets transfer.
How can a Suffolk County Estate Planning Lawyer Help You Reduce Estate Taxes?
Planning ahead to make sure you try to reduce estate taxes after your death is very important. Mark S. Eghrari & Associates PLLC understands the federal and state estate tax rules and will do everything possible to help you use available legal means to reduce or eliminate the estate tax obligation after your death.
You work hard for your money and property and you are taxed during your life both when you earn income and when you acquire property. You don’t deserve to have your property taxed again upon your death. Give us a call today at (631) 265-0599 or contact us online to learn more about how an experienced lawyer can help you to try to avoid estate taxes and protect your legacy.
To learn more, please download our free McNair & Morrison a tale of two Estates here.
Mark S. Eghrari, Estate Planning Attorney
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